US spot phenol trading activity thins on high benzene

HOUSTON (ICIS)--Trading activity for US spot phenol has continued to thin because of record-high feedstock costs, sources said on Wednesday.

Producers and traders agreed that attempting to move spot phenol based on November benzene is uneconomical.

“You can’t do spot phenol; it won’t make you any money,” a trader said.

Sources said that spot phenol made with November benzene would require a selling price of 66-67 cents/lb ($1,455-1,477/tonne, €1,135-1,152/tonne) on an FOB (free on board) basis just to break even with benzene costs.

However, traders said they are seeing bid levels from Asia in the $1,460-1,485/tonne level on a CFR (cost & freight) basis, which would track back to $1,390-1,395/tonne FOB.

Selling at those levels would leave US traders and producers losing 3-4 cents/lb relative to their benzene costs.

Additionally, demand for spot phenol in Asia is soft because of end-of-the-year inventory controls and weak economic conditions.

“Everyone is being squeamish on the hopes that benzene will fall,” a producer said. “But demand is sputtering.”

The continued fall in spot phenol demand and sales is expected to keep operating rates in the US lower than normal.